Dive Into DeFi

Dive Into Defi: Yield Farm Portfolio Strategy (Part 3)

Parts 1 and 2 of the Yield Farm Portfolio Strategy focused on building the concept, and Part 3 now demonstrates a way to run a strategy geared towards the following: Capital preservation, Compounding yield, Position building, and Profit taking.

Parts 1 and 2 of the Yield Farm Portfolio Strategy focused on building the concept, and Part 3 now demonstrates a way to run a strategy geared towards the following:

  1. Capital preservation
  2. Compounding yield
  3. Position building
  4. Profit taking

The diagram below shows a strategy someone could implement to accomplish the goals mentioned above. I don’t run this specific strategy myself, as mine is a bit more complicated, nor am I recommending you do it yourself. I am merely showing one way a yield farmer could utilize BSC projects in an organized manner. 

DiagramDescription automatically generated

Capital Preservation

As mentioned in Part 1 of this 3 part series, capital preservation is paramount, especially if you consider impermanent loss risks. I only choose base liquidity pairs of tokens that I am bullish on, therefore I am relatively indifferent to the specific impermanent loss risk. This whole strategy is geared towards compounding yield; any capital appreciation is only a plus. The example above shows several pairs I like right now; you can revisit Part 1 to see more. 

Compounding Yield

My personal goal when yield farming is to compound yield to accelerate earnings and portfolio growth. One of my goals within my strategies is to build my base positions by utilizing reward token reinvestment. I generally put at least half of all earnings back into my liquidity pairs. This strategy keeps those pairs growing in value and increases my earnings potential over time. 

If you are particularly bullish on a pair, you can skip this step and put it directly into an optimizer like Jetfuel.Finance or Beefy.Finance. That would ensure 100% of the rewards get reinvested. I do this with a few positions myself, but those are outside my main yield farming strategy. 

Position Building

Position building is my favorite part of yield farming. As demonstrated in the strategy map above, one of my goals is to build spot positions of both BTC and ETH. I utilize a yield farming optimizer to compound those continuously via lending protocols while letting the earnings roll in. 

I am also interested in compounding governance tokens of BSC projects that I am particularly bullish on. These include Cake, Jets, and Drugs for now. I allocate a share of earnings to these tokens and deposit them in an optimizer, letting them continue to compound and grow as new use cases arise. 

Not pictured in the map above, but still included in the position building column, is my small allocation of profit to new yield farms. As we all know, knew yield farms carry a laundry list of risks, so I tend to only allocated portions of profits to these. If the projects don’t work out, my base liquidity is still safe, and I didn’t risk much damage to my portfolio. This part can be fascinating, but it is essential to recognize the risks when moving capital into new projects. 

Profit Taking

Profit-taking is one of the hardest parts of crypto to master, especially in a bull market. One way to overcome this hurdle is to allocate a percentage of earnings to a stable coin with every harvest. It Is certainly not fun but will protect more of your capital and even provide you with liquidity should the market dump. 

By utilizing an optimizer, you can get high interest on your stable coin, quickly receiving 20% APY in the current BSC landscape. I don’t feel the need to convert my crypto to fiat altogether to accomplish my profit-taking goals, but instead set aside a portion in BUSD or USDT. As the saying goes, you won’t go broke taking profits. Don’t get completely caught up in the bull market frenzy and leave yourself exposed to the mercy of the market. 


This has been a fun series to write and has made me think deeply about my strategy while writing it. Nothing you decide for yourself needs to be set in stone, especially with the rapidly changing opportunities on BSC. My only recommendations are to think about your goals, how much exposure you want to the market, and make a plan to keep increasing your earnings potential while protecting your capital.

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